Mr. Speaker, I will be splitting my time with the hon. member for Kelowna.
I rise today to speak to Bill C-21, the Small Business Loans Act. I want to make it clear that Reformers oppose this legislation. We think it is wrong headed. We think it goes in the wrong direction completely. I want to start by outlining some of the concerns Reformers have with this piece of legislation.
What is happening here is the government is proposing to raise the liabilities that taxpayers are on the hook for up to $15 billion, a $1 billion increase. We have to stand four square opposed to that. We do that for a number of reasons.
We point out that the auditor general has been extraordinarily critical of the Small Business Loans Act. Taxpayers are already on the hook for $210 million in loans that have gone bad. Because the point of this program is to underwrite loans, inevitably Canadian taxpayers are going to end up on the hook. In this case it is $210 million. Studies done between 1994 and 1996 indicate that 40% of these loans would have been made anyway. I want you to hold that in your head for a moment, Mr. Speaker, and I will come back to it in a moment.
We also point out that job creation figures under the Small Business Loans Act have been grossly inflated. We should not be surprised by that. We have seen it already in programs like the infrastructure program. In fact I heard the treasury board president talking about that today. He was spreading more of that misinformation. The auditor general actually denounced the government for inflating the job creation figures of the infrastructure program. The government has done it again with the Small Business Loans Act.
The final point is there is very little accountability to Parliament.
I want to go back to the point that I asked Mr. Speaker to consider very carefully, the fact that 40% of these loans would have been made anyway. What that tells me is that we are in a situation where the people of Canada are providing backing for loans the banks would have been making anyway. In other words essentially what we are doing is providing a subsidy to the big banks.
The last time I checked it was the Government of Canada that was in the red and it was the banks that were making $7 billion a year in profits. Why in the world is the guy who is in the red, the Government of Canada, subsidizing the banks that are making $7 billion in profits? I do not see any sense in that. I would argue that it is completely contrary to common sense. If we put that proposition to Canadians today, and I guess that is what we are doing, I can guarantee they are going to say that is absolutely insane.
But does the government turn around and say “Well, we made a mistake. We are not going to do that any more”? No. What it wants to do is increase the liability by $1 billion to $15 billion. What is the sense in that?
I can guarantee that Reformers will not support legislation like this. We believe it is completely wrong to start subsidizing some people with the tax dollars of other people only to have those people who are being subsidized turn around and compete against them. That does not make any sense. It is why we oppose some of the regional development programs, the ones with the inflated job creation numbers, the ones that the auditor general has excoriated in the past. We have to get away from that type of thinking. It does not work.
I want to talk for a moment about what does work. We do not want to be negative here. I do believe that the government has fallen prey to the law of unintended consequences. Perhaps the auditor general has pointed the way for it but of course one can only go where people are willing to follow. Let us hope if the government does not heed the auditor general it will heed some of our advice but I am not counting on that.
Let us figure out how we can help small business. There are a number of things.
The first thing is we need more competition in the banking industry. If there was more competition in the banking industry and it was not just the big six banks being able to skim the cream off the top and take the best and the safest loans to help them get those big profits, then they would have to really explore whether or not they should take a bit of a chance on some of the small businesses out there, the ones where people do not have collateral, the ones where maybe their collateral is in their head. It might be one of the high tech companies.
If there was real competition, if we had banks within Canada facing competition from banks outside of Canada or from other institutions such as insurance companies that got into banking, it would force all of those different institutions to look for ways to provide more credit so that they could continue to make profits. That makes sense. More competition is one way that will provide credit for small business.
Another point we want to make, and this is an important one in light of the fact that we have a budget coming up, is we would like to see the debt paid down. People are going to ask what that has to do with providing help for small businesses. The fact is when the government has a debt of $600 billion and when industry can go wherever it wants to invest, chances are they are not going to come to the country that is most indebted. We saw that in the Asian crisis. When there was a flight to quality did they come to Canada? Hardly and we have seen our dollar fall as a result of that. They went to the United States.
We need to attract those people here. When they come here they bring investment. We have to start paying down the debt to attract those people. By doing that we also start to lower our interest rates. The government all of a sudden is no longer the one that holds all the money and credit is available for other businesses, for instance small businesses. I know that is not as sexy as getting some kind of a small business loan from the bank with the name of the Government of Canada on it. It probably does not get as much political credit, but it works. That is what is important.
Let us start to pay down the debt. Reformers have laid out a plan where we would lower the current debt to GDP ratio from over 70% debt to GDP down to 20% over a period of about 20 years. In the course of that we would save taxpayers about $20 billion a year in interest. It is a good deal all around.
The other thing is, and my friend from Calgary Southeast has mentioned it, we must start to lower taxes. My friend has pointed out and he is absolutely right, that when we talk to small business people they do not say “Boy I wish we could have the Small Business Loans Act liability raised $1 billion”. We do not hear that. But they sure do say “Let us lower payroll taxes. Let us get payroll taxes down so that there is no longer a disincentive for us to hire people”. They point out that payroll taxes are not profit sensitive. If they are in a loss position they are still paying taxes. In fact they could literally be taxed out of business. Let us get those payroll taxes down.
We talk about the small business exemption of $200,000 which should be raised. My friend from Saskatoon pointed this out earlier. If we allowed it to be indexed to inflation it would be up over $300,000 right now. I think he said $315,000. That would help small businesses tremendously.
Let us look at some other alternatives. If we really want to help small business in this country, let us not fool around by raising liabilities by $1 billion and putting taxpayers on the hook for another $1 billion. Let us get away from that central planning thinking which went out with the fall of the Berlin wall. It is time to embrace market liberalism. It is time to embrace the ideas that really do create wealth in this country. That means lower taxes, lower debt, an atmosphere where people are encouraged to invest.
One of the things we advocate is cutting the capital gains tax. We believe that it makes sense to offer people incentives to invest. That would do a tremendous amount to help people who want to start their own small business. All of a sudden there would be all of these people who have a real incentive to invest in a business.
I talked about the folly of Bill C-21, the Small Business Loans Act and some of the particulars in it. More than that we have offered some positive alternatives, some alternatives that will help Canadians, that will give them some opportunity, something they have been missing for a long time.
I encourage my friends across the way to consider closely what we have said and my colleagues on this side to vote against Bill C-21.
